Centre asks states to scale up DBT scheme for food subsidy

IN a bid to curb pilferage of foodgrains in the Targeted Public Distribution System (TPDS), the Centre on Saturday asked the states to opt for Direct Benefit Transfer...

At present, just about eight lakh people are covered with DBT in PDS, which is currently being piloted in the Union territories (UTs) of Chandigarh, Puducherry and Dadra and Nagar Haveli. (Reuters)

IN a bid to curb pilferage of foodgrains in the Targeted Public Distribution System (TPDS), the Centre on Saturday asked the states to opt for Direct Benefit Transfer (DBT) under which the subsidy component is credited to bank accounts and allows the beneficiaries to buy foodgrains from the market.

However, for implementing DBT, the states must complete digitisation of beneficiary list and seed bank account details for fund transfer. At present, just about eight lakh people are covered with DBT in PDS, which is currently being piloted in the Union territories (UTs) of Chandigarh, Puducherry and Dadra and Nagar Haveli. Sources told FE that even this has resulted in an annual saving of around Rs 12 crore.

“More states and UTs must adopt cash transfer model of DBT especially in urban areas and then scale it up,” food minister Ram Vilas Paswan said after a meeting with state food ministers in New Delhi on Saturday. In a recent meeting chaired by Prime Minister Narendra Modi, it was mentioned that DBT scheme for subsidies has resulted in significant savings across welfare schemes.

Besides, the food ministry has also asked the states to adopt decentralised procurement (DCP) of grains by the next kharif marketing season so that more farmers are covered under the Minimum Support Price (MSP) regime. At present, Bihar, Chhattisgarh, Madhya Pradesh, Uttarakhand and West Bengal have adopted DCP system for procurement of wheat and rice or paddy while Karnataka, Kerala, Odisha, Tamil Nadu, Andhra Pradesh, Telangana and the Andaman Islands have adopted the DCP system for procurement of paddy.

Under DCP, state government agencies procure, store and distribute procured foodgrains under TPDS and other welfare schemes, while surplus quantity procured by the concern state is taken over by the Food Corporation of India (FCI) to meet the TPDS requirement of deficit states. As per a food ministry official, DCP operations help in savings in food subsidy, enhancing the efficiency of procurement, PDS and encouraging local procurement to the maximum extent thereby extending the benefits of MSP to those farmers where FCI does not have a robust presence.

The High Level Committee (HLC) for FCI restructuring chaired by former food minister Shanta Kumar last year had recommended gradual introduction of cash transfers in PDS, starting with large cities with more than one million population and then extending it to grain surplus states, and then giving option to deficit states to opt for cash or physical grain distribution.

“This will be a much more cost-effective way to help the poor, without much distortion in the production basket, and in line with best international practices. Our calculations reveal that it can save the exchequer more than R30,000 crore annually, and still give a better deal to consumers,” HLC had stated. In the food ministers’ conference, Paswan also said that the National Food Security Act (NFSA) has been rolled out in 33 states covering a population of 72 crore and Uts, and by July all the other states would roll out NFSA.

In the meeting, Paswan also urged states to focus on better targeting of food subsidy while urging them to carry out end-to-end computerisation of TPDS. As per food ministry data, so far about 56% ration cards out of total 24 crore cards have been seeded with Aadhaar.